EAST Hampshire District Council wants to cap tax rises at the rate of inflation to bolster the authority's "low taxation" reputation.

The key aim of financial chiefs when setting next year's budget, and the financial framework for the next four years, has been to keep tax rises to an average of 2.5 per cent.

The leader of the Tory controlled council, Andrew Pattie, said the authority already had a reputation for low taxation and it was a reputation they intended to live up to.

The Tories swept to power at the last district election in 2003 on the boast of low tax rises in the previous four years, and the financial framework outlined last week is based on capping tax rises until at least the next election in 2007.

Based on 2.5 per cent rise there is a £176,000 shortfall in the council's 2005/06 revenue budget but officers are confident that can be addressed by further savings and surplus generated in this financial year.

David Purt, the council's corporate financial manager, told a cabinet meeting last week that officers intended to present a balanced budget to councillors in January.

He said: "We should end the year with a modest surplus, some of that could be used to smooth the shortfall for next year."

But he added: "There are uncertainties, as with any forecasting. We do not know what the level of government support will be but indications are that it will not be good.

"We are starting the budget process two months earlier than last year. Hopefully that will give more time for comments and we intend to take the report to the area community committees in November. We are also organising a consultation evening with businesses."

The predicted £176,000 funding shortfall in 2005/06 represents 1.3 per cent of the council's net service expenditure.

But in his report to the cabinet, Mr Purt stated that this year there was a predicted revenue surplus of £256,000, largely due to improved investment interest and revised street-care costs.

He added the "strong financial position" could be eroded in the second half of this financial year by fluctuations in car park income and housing based activities such as land charges and planning and building control fees.

But Mr Purt said that officers were "comfortable to advise Cabinet that at least £100,000 of the surplus generated in 2004/05 could be used to finance part of the shortfall".

The cabinet backed the budget and financial forecast assumptions and the consultation timetable.

Consultation on the 2005/06 budget will now be carried out at area community committees before being presented to cabinet again in January 2005.